Does Hubbell Incorporated's (NYSE:HUBB) Past Performance Indicate A Stronger Future?
After looking at Hubbell Incorporated's (NYSE:HUBB) latest earnings announcement (31 December 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Check out our latest analysis for Hubbell
How HUBB fared against its long-term earnings performance and its industry
HUBB's trailing twelve-month earnings (from 31 December 2019) of US$399m has jumped 11% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.3%, indicating the rate at which HUBB is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is only owing to industry tailwinds, or if Hubbell has experienced some company-specific growth.
In terms of returns from investment, Hubbell has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.5% exceeds the US Electrical industry of 6.5%, indicating Hubbell has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Hubbell’s debt level, has declined over the past 3 years from 18% to 15%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 31% to 80% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Hubbell gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Hubbell to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for HUBB’s future growth? Take a look at our free research report of analyst consensus for HUBB’s outlook.
Financial Health: Are HUBB’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
